SQL Server and "User Instance" Error: The user instance login flag is not supported on this version of SQL Server. The connection will be closed

If you attempt using the membership/role providers with the .NET framework 2.0, you may get the following error:

The user instance login flag is not supported on this version of SQL Server. The connection will be closed

There could be a number of reasons:

1) You have not run the aspnet_regsql (in the C:\Windows\Microsoft .NET\Framework..) folder to register the required stored procedures for the membership and/or role providers.

2) You are not using SQL Server Express and your connection string has User Instance=True.

3) You downloaded a starter kit and trying to point it to a SQL Server 2005 instance and haven't modified the default Web.config (or forgot to remove User Instance=True in the connection string).

What's the User Instance flag used for?

It is only supported for the express edition of SQL Server. It allows running applications under a least-privilege user account (LUA).

It allows the creation of a separate SQL Server Express instance (spunned off the parent instance) that runs under the security context of the current user. You can read more here.